1.1 HOW TO STUDY FOR SUCCESS IN SCHOOL AND PREPARE FOR CERTIFICATION EXAMS

The central theme of How to Succeed in Accounting is control: Establish plans, perform effectively, evaluate your performance, understand shortcomings, and follow through with an improved strategy. This is an executive approach that will work for you, especially if you aspire to be an executive–and you should, because you will have the opportunity.

What is your objective? Presumably, it is to earn a degree in accounting and subsequently sit for the CPA, CIA, CMA, and/or EA exams.

Why? The prospects of employment are good, and starting salaries are high and stable. For example, an accountant with a CPA in a large public firm could earn almost $75,000 in his or her first year. That number could be as high as $85,000 by his or her third year!*

What then? What will you be doing in 5 years? 10 years? 15 years? No one knows for sure, but to the extent that you improve your study program and become a more qualified candidate, you will brighten your career prospects. You want to train not only to be a professional accountant but also to be ready for the opportunity for a successful career.

* Robert Half 2014 Salary Guide

PLANNING YOUR CURRICULUM

Chronologically list all of your courses to date by semester (or quarter). Put credits and grades to the right.

Underneath this listing, organize a desirable schedule of remaining courses and credits.

Consult your university website, college and departmental requirements, and any other relevant materials.

Make sure you will meet all the requirements to graduate.

Have you planned your courses in the proper sequence in terms of prerequisites?

Make sure you are completing the requirements to be eligible to take the certification exam.

Review your schedule with an appropriate school advisor and confirm that it satisfies the requirements for your graduation. Don’t guess. Use the university resources available to properly prepare your college curriculum.

GRADES ARE IMPORTANT

Usually, a “B” average or higher is necessary to enter graduate programs and/or law school. Some CPA firms and other employers restrict their hiring to individuals with a “B” average or better.*

If your GPA is currently below an “A” average or if your previous academic successes involved more memorizing and less learning and application, then How to Succeed in Accounting is particularly relevant to you. You must do your best in each course, especially those pertaining to your career. Other courses are also important because they affect your overall GPA and help make you a more well-rounded person. Your employer will be interested in you as a person, not just as an accounting technician.

*If you currently are struggling with a “C” average, don’t give up. These techniques should help you improve. While higher grades are preferred, many “C” or “C+” students are extremely successful once out of school.

...AND SO ARE STUDENT ACTIVITIES

To their detriment, some students overemphasize grades. You also need to develop your “people skills,” which is harder to do now that many courses are taught online.

Join your accounting club or the honorary accounting fraternity, Beta Alpha Psi, if your school is a member of the American Association of Collegiate Schools of Business. To develop leadership skills, plan to serve as an officer. Create your own club. Volunteer to help low-income families with tax returns. Balance your academic efforts with other activities, such as community service, intramural sports, student government, or the pursuit of personal interests.

Almost all prospective employers are interested in your leadership, communication, and social skills. You will also need to be proficient in computer applications, so make sure to master those programs as well.

SHOULD YOU GO FOR A MASTER’S DEGREE?

Just as your bachelor’s degree is an investment in your future, so is a master’s degree (MA, MS, or MBA).

Reasons to Pursue a Master’s Degree

1.

A master’s in accounting provides you with even greater opportunities for employment and career advancement and translates to a premium salary. One study indicates as much as a $23,000 difference in yearly salary!

2.

Your employer will have higher expectations as a result of your additional training. Usually this translates into better assignments, more responsibility, faster promotion, and higher compensation.

3.

Positions for advanced employment frequently require (a) a master’s; (b) the CPA, CMA, and/or CIA designation; and (c) several years of experience for accounting executive positions or managerial positions, such as controller or treasurer. Adding the EA designation will show your proficiency in tax matters.

4.

Once you begin working long hours in a specialized field, resuming the role of a student is not easy. It’s best to stay in school until your educational goals have been met, if possible.

Considering the Cost

Education is the best investment you will make! The amount and availability of financial support can be an impediment to continued education, but borrowing funds to pursue a higher level of education is generally a prudent financial decision, especially if you graduate with an accounting degree. A part-time job will also help defray some of your costs.

Delaying the Attainment of a Master’s Degree

Many professionals attend graduate school on a part-time basis (evenings, weekends) if circumstances did not allow them to do so before entering the work force. These programs provide a chance to interact with peers who have similar interests and aspirations. An added benefit of attending graduate school part-time is learning from the work experience of classmates with various backgrounds, which significantly enriches class discussion. Your employer may also offer tuition assistance if the education furthers your employment with the company.

THE BASICS OF LEARNING AND UNDERSTANDING

Your Cognitive Processes

Which mental processes do you use for learning?

How do you internalize assignments?

How do you process facts and concepts to complete assignments and take tests?

By better understanding how you study, you can learn to be more efficient and effective. If you improve your study processes by 20%, you can change 80% scores to 96% scores and reduce studying 30 hours per week to 24 hours. Let’s learn how.

To Learn (According to Merriam-Webster Dictionary)

Main Entry: learn

Function: verb

Inflected Form(s): learned; learn•ing

transitive verb

1 a (1) : to gain knowledge or understanding of or skill in by study, instruction, or experience <learn a trade> (2) : memorize <learn the lines of a play>

Accountants mainly focus on concept learning and rule learning. Most accounting and business concepts are multidimensional (i.e., relate to many concepts, rules, and relationships); therefore, they can be better understood by examining their multiple aspects. For example, you might view a financial accounting transaction in light of

Required journal entries

Impact on the financial statements

Consequences of the transaction for the business

Motivation of all parties to enter into the transaction

Behavioral implications to employees, customers, competitors, etc.

Train yourself to consider the contextual implications of the underlying business transactions for all accounting procedures you study. For example, what effect a given procedure or transaction will have on

Purchasing power

Financial ratios

Cash flows

Cost of capital

Earnings per share

Dividend growth

LEVELS OF COGNITIVE ACTIVITY

One categorization of the levels of knowledge1 can be illustrated by the following image:

These levels are a revised version of Bloom’s taxonomy2, which has been used in curriculum planning, research, and other areas of education and psychology since 1956. The levels are cumulative–they constitute building blocks of cognitive processes. To understand something, you need to remember what you have already learned; to analyze problems, you must understand the concepts.

Remembering. Recalling knowledge, e.g., definitions of technical terms and sources of information. Objective questions often test this kind of knowledge, which is the most fundamental since it entails basic memorization. This requires little mental processing beyond simple recall.

ACCOUNTING EXAMPLE: According to Statement on Financial Accounting Concepts (SFAC) No. 8, the two fundamental qualitative characteristics of accounting information are relevance and faithful representation.

Understanding. Understanding and interpreting written and quantitative data. Questions at this level test understanding of concepts, including interrelationships within data. This level of knowledge is also called comprehension.

ACCOUNTING EXAMPLE: According to SFAC No. 8, “Relevant financial information is capable of making a difference in the decisions made by users. Financial information is capable of making a difference in decisions if it has predictive value, confirmatory value, or both.” What does this mean? Do you understand? Can you explain it to someone else? The ability to explain a concept to someone else is an indicator of your comprehension.

Applying. Applying knowledge for problem solving. Questions at this level examine practical applications of concepts to solve a problem. Thus, applying combines both remembering and understanding in order to solve problems.

ACCOUNTING EXAMPLE: Memorizing the cost of goods sold (COGS) formula is mere recall [COGS = BI (beginning inventory) + Pur (purchases) – EI (ending inventory)]. In order to solve more complex problems, such as the effect of inventory errors, you should also understand the relationship of the change in inventory level to COGS. For example, when EI is greater than BI, it means not all purchases were sold. Given BI, Pur, and EI, most students can solve for COGS simply by plugging numbers into the formula. But an interpretation of the relationship of the data is required for more complex problems.

Analyzing. Analytical ability, including identification of cause-and-effect relationships, internal consistencies or inconsistencies, relevant and irrelevant items, and underlying assumptions. The following question requires analysis and interrelation of a number of variables to reach a conclusion.

ACCOUNTING EXAMPLE: Would you accept a customer’s order at a lower-than-usual price? Variables to consider include contribution margin generated, available production capacity, and psychological and economic effects on other customers.

Evaluating. What is the best (most effective) method (alternative)? Evaluation, like analysis, takes into consideration qualitative as well as quantitative variables. Evaluation takes the process one step further, though; it involves making a judgment based on the results of the analysis.

ACCOUNTING EXAMPLE: The company received a special order to produce an additional 1,000 units. The decision to accept the special order requires evaluation of production capabilities and personnel availability.

Creating. Designing, constructing, planning. In today’s learning and business environments, students and professionals often create their own programs to suit their needs and goals. This type of activity involves the synthesis of multiple elements to either reform an existing structure or create an entirely new one.

ACCOUNTING EXAMPLE: A new company hires a consultant to analyze and evaluate its operations. The company wishes to have the consultant develop and design (create) a new system of internal controls that are better-suited to the company than those currently in place, which it has found to be inadequate.

Undergraduate accounting courses generally emphasize the first three levels of knowledge, while your career in professional accounting will require and emphasize the last three levels. Gleim products will help you reach these higher levels of thinking while preparing you for your exams.

Put another way, the first three levels of knowledge are required to prepare financial data. The second three levels are necessary to use financial data and exercise professional judgment. How does accounting differ from bookkeeping? Professional judgment.

In your study of accounting, you must go well beyond recall and memorization. Many accountants move on to executive positions after beginning their professional career as an “accountant.” Even those who remain in accounting exercise more and more judgment and rely less and less on rote memory as they take on and exercise more responsibility.

2 Bloom, B.S. and Krathwohl, D.R. (1956) Taxonomy of Educational Objectives: The Classification of Educational Goals, by a committee of college and university examiners. Handbook I: Cognitive Domain. NY, NY: Longmans, Green.

THE BASICS OF STUDYING

Course Overview

At the very beginning of the term, as soon as you have your text and syllabus, create an executive overview of each course.

Write down the chapter titles. Using this information, ask yourself: What is the course about? How does its content relate to courses I have already taken and to courses I plan to take in the future?

Skim each chapter. Read the introduction and summary/conclusion. Your objective is to gain more insight into each chapter’s content and approach than you gained from the chapter title analysis in 1. above.

Document your effort. Write a short paragraph and/or summary outline of each chapter.

Examine the entire course overview. Has your executive overview of the course changed and become more focused as a result of your analysis?

The entire process will probably take 2 to 4 hours. Spend half a day at the library and do a thorough job for each course. This initial investment of time will pay dividends because you have a basis for understanding how the chapters and their parts fit into the overall course at this point.

Now you will be able to put individual definitions and concepts into the context of the entire course. Through the exercise of control, you will be more efficient and effective and therefore better prepared to attain higher levels of knowledge.

STUDY SUGGESTIONS

Where to Study

Study where you study best. Some study best at home. Others study best at the library. Some prefer to study at different locations at various times in the day and/or on different days. Still others study at only one location.

The issue is effective study. You must seek out the study locations that provide you with the most effective environment for concentration, which means avoiding or blocking out distractions most often produced by people you know. Try out-of-the-way places where other accounting majors and friends do not study, e.g., the law library. Consider turning off your cell phone.

When to Study

Study on a regular basis, 7 days a week to the extent possible. Stay ahead of all assigned material. Do not wait to study before exams and assignment due dates. Such a habit emphasizes rote memorization, which does not result in learning and understanding. You will improve your grade point average and increase the amount learned by investing several hours in each class at the very beginning of each term (as advised in “Course Overview” above).

Are you a morning person? Do you study more effectively in the morning or in the evening? Experiment with different study times to determine when you are most effective and schedule your time accordingly.

Remember, the important point is that you must study regularly to stay ahead. Class lectures and discussion are so much more meaningful and beneficial when you have studied the assignment prior to attending class. A good rule to follow is, “You are behind if you are not ahead.” Stay ahead of all of your classes by following a regular study schedule.

How to Study a Chapter in a Textbook

Before reading a chapter, gain a general understanding of the chapter contents. The following seven steps should precede actual study:

Read the chapter summary. What is it about?

Skim through the chapter.

Look at the requirements of the exercises and problems to see what is expected.

Try to answer the discussion questions at the back of the chapter to see if you can provide answers based upon your present knowledge and common sense. If possible, relate real-life (business-world) examples to the discussion questions or requirements to help your understanding.

Obtain and use the appropriate Gleim Exam Questions and Explanations book and EQE Test Prep. See “How to Supplement Your Studies with Gleim Exam Questions and Explanations” below.

Each Gleim product contains an extensive test bank of former exam questions and is thoroughly cross-referenced to textbooks used at universities throughout the U.S. Accordingly, you can identify specific areas in the Gleim book for each chapter in your textbook. Answer 5 to 10 questions to determine the standards to which you will be held. Gleim EQE Test Prep allows you to study, self-test, and measure your progress. Please see www.gleim.com/accounting/eqe/.

Outline the chapter based on the headings. Rewrite them in your own words. Do not recopy phrases from the textbook. Put concepts into your own words so you understand rather than memorize.

Begin studying, rather than simply reading, since you now have an overview of the chapter and have thought about what is in it. Studying means understanding. What is the author saying? Do you agree? How does each concept fit into the chapter?

Remember, the objective is not to read the chapter and complete an assignment. The objective is to understand the material well enough to be able to explain it to someone else. To this end, you need to be sufficiently conversant with the material in each chapter so that you can confidently discuss it, question it, and/or critique it with your professor, as well as assimilate it with class lectures and notes.

During Class Time

Ask at least one question during each class session. Engage your professor in discussion about a topic, procedure, or principle that you do not understand. Many beginning accounting students are introverts, sit passively in class, and only receive information. This approach is inefficient because these students simply write down formulas, definitions, etc., for later regurgitation without understanding the concepts.

Stay ahead of your professor, answer all questions asked (usually to yourself), and look ahead during lectures. Anticipate what will be next. Pre-class preparation permits you to learn in class. The poor alternative (both inefficient and ineffective) is to play “catch-up,” i.e., attempt to memorize lists, definitions, etc., out of context after class is over. Remember, you have Gleim Exam Questions and Explanations products to supplement your study and significantly improve your preparation.

Attempt to relate your current course material to that covered in previous courses. A thorough understanding of the material in previous courses makes it feasible to tie the contents of all your courses together.

Make notes in the margins of your books; they are your study vehicle. Just as you should ask questions and discuss topics with your professor, you need to understand your text. Critique your text as you study! How could it be improved? How would you organize and present the material?

NOTE: Do not become completely dependent on highlighters and underlining! Yes, many students highlight and underline, but using short-term memory to become familiar with the concepts, facts, and definitions is only sufficient to complete courses. Remember that you are in school to learn and understand with the objective of a successful career, not just to get a diploma.

How to Complete Homework Assignments

Many accounting course assignments consist of computational problems that are largely similar to the examples and illustrations in your chapters. Thus, most of your homework problems are susceptible to “cookbooking,” or copying from the chapter illustration, step-by-step. Barely more than rote memorization is required to achieve false success.

However, you will be adequately prepared to complete your homework assignments under exam conditions (time pressure and no reference back to the chapter) because you have previously accomplished the necessary building blocks in your individualized control process: establishing where and when to study, surveying the course, studying your textbook, answering multiple-choice questions in the Gleim Exam Questions and Explanations book and EQE Test Prep, and participating in class.

First, scan the exercise or problem and set a 5-, 10-, or 15-minute time limit. With a watch or clock handy, see how much you can accomplish within the time limit.

Next, as you get each problem under control, note the issues you need to research after you have substantially completed the problem.

Put yourself in a frame of mind to be highly productive during homework preparation. Effective time management is very important for successful exam performance. Do your best! No one can ask for more.

Develop and use your question-answering techniques on each homework assignment. These systematic methods of problem solving should be executive in nature. Before you start, determine what has to be done, how it has to be done, the sequence of procedures, etc. It is the same general approach recommended for course overviews, studying a chapter, taking an exam, etc.

HOW TO SUCCEED ON EXAMS – PREPARATION AND CONTROL

Preparation – In order to be successful on academic and certification examinations, you must

Understand the exam, including coverage, content, format, administration, and grading.

For college courses: Ask your professor for clarification of the exam process publicly in class and privately in his or her office, talk to former students, and attempt to review exams from prior terms.

For certifications: Virtually all certification programs (CPA, CIA, CMA, EA, etc.), admission tests, and other established exams have informational books developed by those responsible for the examination. For example, Gleim prepares and provides free to all customers and students comprehensive System for Success (www.gleim.com/sfs) booklets that contain all of the information you need for complete understanding of the CPA, CIA, CMA, and EA exams. The better you understand the process, the better you will perform.

Learn and understand the subject matter tested.

For college courses: Confirm text and chapter coverage with your professor. Also, to what extent are class lectures, examples, handouts, etc., tested?

For certifications: Obtain content specification outlines for established exams. Confirm coverage by looking at past examinations (if available) and/or review manuals. For example, Gleim includes the content syllabus for each exam in the relevant Review book. That way, your assurance of coverage is right there!

Practice answering recent exam questions to perfect your exam question-answering and time-management techniques. Answering recent exam questions helps you understand the standards to which you will be held. It also helps you understand the material tested and gauge how you will need to manage your time to complete all questions.

For college courses: See “How to Supplement Your Studies with Gleim Exam Questions and Explanations” below.

Plan and practice exam execution. Anticipate the exam environment and prepare a plan, including your arrival time, your manner of dress, the appropriate exam supplies, the expected number of questions and the format, the order in which you will answer questions, and the time you will spend on each question. Expect the unexpected and adjust!

For college courses and certifications: Remember that your sole objective when taking an examination is to maximize your score. Most examinations are “curved,” and you must outperform your peers.

Most importantly, develop confidence and ensure success with a controlled preparation program followed by confident execution during the examination.

Control – You must be in control to be successful during exam preparation and execution.

Control can also contribute greatly to your personal and other professional goals. Control is a process whereby you

Develop expectations, standards, budgets, and plans

Undertake activity, production, study, and learning

Measure the activity, production, output, and knowledge

Compare actual activity with expected or budgeted activity

Modify the activity, behavior, or production to better achieve the desired outcome

Revise expectations and standards in light of actual experience

Continue the process

The objective is to be confident that the best possible performance is being generated. Most accountants study and understand this process in relation to standard costs, i.e., establish cost standards and compute cost variances.

Every day you rely on control systems implicitly. Consider this simple example: When you get dressed, you have expectations about the desired appearance of your outfit and the time required to attain that appearance. You monitor your progress and make adjustments as appropriate, e.g., straighten your tie or iron your skirt.

Develop and enforce standards in all of your endeavors. Exercise control, implicitly or explicitly. Most endeavors will improve with explicit control. This is particularly true with certification examinations and other academic tests.

Develop explicit control over your study programs based on the control process discussed above.

Think about using more explicit control systems over any and all of your endeavors.

Seek continuous improvement to meet your needs given a particular situation or constraint. Additional practice will result in further efficiencies.

SUCCESSFUL ACCOUNTING

STUDENTS STUDY WITH

THE GLEIM

SERIES

Accounting is competitive (academically and professionally). The Gleim Series provides a competitive advantage by improving the effectiveness of your study time through learning and understanding.

The Gleim Series works! Gleim will help you to

Learn and understand more in less time

Improve your test scores and earn higher grades

Practice answering certification (CPA, CMA, etc.) exam questions

Propel yourself into a career in accounting

After graduation, you will compete with graduates from schools across the country in the accounting job market. Make sure you measure up to standards that are as demanding as the standards of your counterparts at other schools. These standards will be tested on professional certification exams.

Practice Multiple-Choice Questions; Learn from Answer Explanations

Each book in the Gleim Series is a comprehensive source of multiple-choice questions with thorough explanations of each correct and incorrect answer. You learn from our explanations regardless of your answers to the questions.

Monitor Your Progress

Pretest before class to see if you are strong or weak in the assigned area. Retest after class and before each exam or quiz to be certain you really understand the material.

Rely on our Coverage as Detailed in the Cross-References

The questions in these books cover virtually all topics in your courses. You will rarely encounter questions for which you are not well prepared. Each Gleim book is cross-referenced to the primary textbook used in your class.

Use Gleim EQE Test Prep

The student next to you has the exam questions – do you? See what might be on the exam before you take it! Use the Gleim Exam Questions and Explanations books and EQE Test Prep to master the material in your courses and learn how to succeed on exams – almost 9,000 questions with detailed discussions covering every accounting, tax, business law, and auditing topic!

HOW TO SUPPLEMENT YOUR STUDIES WITH GLEIM EXAM QUESTIONS AND EXPLANATIONS

Experts on testing continue to view multiple-choice questions as a valid means of examining various levels of knowledge. Many of the questions on the GMAT, GRE, LSAT, and other entrance examinations are multiple-choice questions. Two major certification exams, the EA and CIA, remain 100% multiple-choice, and the percentage of multiple-choice and other forms of objective questions on the CMA and CPA exams remains very high.

Using objective questions to study for undergraduate examinations is an important tool not only for obtaining good grades but also for long-range preparation for certification and other examinations.

The following suggestions will help you study in conjunction with each Gleim Exam Questions and Explanations product:

Locate the study unit that contains questions on the topic you are currently studying. Each Exam Questions and Explanations book contains cross-references to the tables of contents of most textbooks.

Work through a series of questions, selecting the answers you think are correct.

If you are using the Gleim book, do not consult the answer or answer explanations on the right side of each page until after you have chosen and written down an answer.

It is crucial that you cover the answer explanations and intellectually commit yourself to an answer. This method will help you understand the concept much better, even if you answered the question incorrectly. EQE Test Prep automates this process for you.

Study the explanations to each question you answered incorrectly. In addition to learning and understanding the concept tested, analyze why you missed the question.

Did you misread the question or misunderstand the requirement?

Did you make a math error?

Did you not know the concept tested?

Studying the important concepts that we provide in our answer explanations will help you understand the principles to the point that you can answer that question (and any others like it) successfully.

Identify your weaknesses and take corrective action before you take a test. Prepare a summary analysis of your work on each subunit (topic). With EQE Test Prep, simply view your performance analysis information. The following are some sample column headings that could be used:

Date

Subunit

Time to Complete

Questions Answered

Avg. Time per Question

Questions Correct

Percent Correct

The analysis will show your weaknesses (areas needing more study) and also your strengths (areas of improvement). You can improve your performance on objective questions both by increasing your percentage of correct answers and by decreasing the time spent per question.

IMPROVE YOUR GRADES!

Use these objective question and explanation products to ensure your understanding of each topic you study in your accounting and business law courses. Access the largest bank of exam questions (including thousands from past certification exams) that is widely used by professors. Get immediate feedback on your study effort while you take your practice tests.